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People in financial trouble may take on payday, pawn shop and car title loans loans to tide them over until they're financially stable. But these seemingly innocent loans often cause them to end up in worse shape than when they started.

On the outside, they just look like convenient ways for people with subprime credit to borrow money. However, there's no such thing as easy money. Read on to learn the truth about these three risky loans, and find some alternatives you should consider instead.

Payday Loans

How they work: The payday loan process usually begins with you writing a post-dated check for the loan amount plus interest and fees. When the loan is due, the lender collects the balance unless you choose to roll the loan over (in exchange for more fees, of course).

Why they're dangerous: These loans boast notoriously high interest rates that make it almost impossible for borrowers to pay off their balance on time. Even if they pay a small amount each payday, this often just covers the interest and fees, leaving the balance intact. Richard Cordray, the Consumer Financial Protection Bureau director, said in a statement last year that payday loans are long-term, expensive debt burdens: "For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates." It should come as no surprise that payday loan borrowers often find themselves needing to roll over or take on new loans, trapped in a vicious cycle of debt.

Pawn Shop Loans

How they work: Pawn shop loans typically involve you giving the pawn shop an item that you own (like a television, piece of jewelry or computer) as collateral, and the pawn shop lends you a percentage of the item's value.

Why they're dangerous: These loans are short-term and typically have very high interest rates and a variety of fees. If at the end of the loan period you can't afford to pay the balance plus interest and fees, the pawn shop may keep your item and sell it.

Car Title Loans

How they work: Like pawn shop loans, car title loans use one of your possessions (in this case, your automobile) as collateral to secure a short-term loan for a fraction of what your car is worth –- provided that you own the car free and clear. Just sign over the title of your car, and hand over a set of keys.

Why they're dangerous: As with payday and pawn shop loans, these secured loans typically come with very high (often triple-digit) interest rates and loads of hidden costs, from storage fees to repossession fees. This brings up another huge red flag – if you miss just one payment, fail to pay the fees or aren't able to pay the interest accrued on the loan by the end of the term, your car could be sold or repossessed. Also, since title loans are often only 30 days long, borrowers only have a short amount of time to pay the principal, interest and fees. Since they usually aren't able to pay everything back when it's due, they often renew the loan and the nightmare begins all over again.

How Do These Loans Affect My Finances?

The most redeeming qualities about secured loans are that lenders typically won't check your credit, and the loans aren't reported to the credit bureaus. But while you're frantically trying to gather enough money to pay off those loans, you may neglect paying off things that do affect your credit. So while they may not directly affect your score, know that secured loans can still cause trouble for your credit health.

Alternatives

Even if you're strapped for cash, you don't need to agree to ridiculously high interest rates. Instead of taking on risky loans, consider these other options:

Short-term loans: Small banks or credit unions may offer you loans with better rates and repayment terms.

Asking for an extension: If you call your creditors before you miss a payment, they may be willing to give you a due-date extension or work out a payment plan.

Borrowing from loved ones: It may be uncomfortable, but asking friends or family for a loan could still be a better alternative than secured loans. Just be sure to pay them back -– you don't want to burn bridges.

Payday advances: If you have a benevolent employer, try asking for a payday advance. Since it's your money, not a loan, you'll save money on interest.

Emergency assistance programs: You may find emergency assistance from community organizations or social services programs. In many areas, a call to 211 will connect you to help.

Cash advances on credit cards: While not ideal, the 25 to 30 percent in interest you may be charged for a cash advance is certainly better than triple-digit interest via the loans covered earlier.

Final Thoughts

Personal finance experts always recommend building up an emergency fund so you can avoid dangerous situations that are hard to escape. If you're not desperate for money yet, don't wait until an emergency strikes. Avoid living paycheck to paycheck at all costs, even if you have to trim your spending and live less comfortably.

If you're in a situation where you need to borrow money quickly, don't let emotions lead to rash decisions. Assess whether you'll realistically be able to repay the loan or not, and be wary about lenders who don't check your credit or income to make sure you can afford the loan. Other red flags include loans that have astronomically high annual percentage rates, loans that don't advertise the APR and situations in which funds can be automatically deducted from your checking account.

It may seem hopeless, but you can get through this tough time without taking on a secured loan. Just remember: Evaluate your options, know what you're getting yourself into and breathe.

Jenna Lee is the social media manager for CreditKarma.com, a free credit monitoring website.

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JAy Pawn

Hello, My name is Jason and I work at Pawn1st Pawn & Title Loans in Phoenix Arizona. I frequently come across articles and posts referring to the bad nature of title loans. Some have statistical accuracies and others inaccurate. I see very few that offer people another option. There are a few companies out there like ours that offer a variety of loans however they are all short-term emergency cash loans for people with no other options. If you can borrow money from a credit union, family member, friend or employer,,, this would be an ideal option, however we do not live in an ideal world. People get into financial hardships that do not have good credit or a financial support system. We have not been offering title loans for very long, just a few years. But in that time we have noticed a payment structure that is difficult to manage. This is why we have restructured our title loans and registration loans to a new payment plan. A traditional title loan would generally be for 30 days and you would only be required to pay the interest, then you would renew the loan for another 30 days, thus leaving it up to you to pay off the balance. With our new payment structure you can choose the length of your loan, from one month to 24 months. Also your payment will not only include your interest but the principal as well. This has and will be more manageable for you if you need to obtain a title loan or registration loan. It is basically like any other type of loan, however interest rates will be higher because we do not run credit checks and we take a higher risk when lending money. Here is more information on our new title loan payment structure. http://pawn1st.net/new-title-loan-payment-structure/

I am trying to get word out that if you are in need of a higher interest emergency cash loan, to shop around and find a title loan company like ours to do business with. It is a much smarter move and is another option for those in need. And yes there are a lot of people in need. Unlike many title loan companies who try and lure you in, we strive to educate our customers in person and online to the options available to them. If you are going to get a title loan please do the research on the company, also have a well thought out plan on how you will pay the loan back.

Everyone wants to jump on the side of the "hard working poor sap," who, by no fault of his own, "fell on hard times," but I'd bet the research would show that's a specifically small part of their customer base.

No, I'd bet the majority are the same type of people I see every day who have huge egos, buy way more (usually on credit) than they can afford, and have no compunction with mortgaging their and their children's futures to have the "latest and greatest."

For these kinds of folks, bad credit and the results of it are the norm. It's a lifestyle. When the inevitable "downturns" come -- for which, by definition they will not be prepared -- they have everybody else from A to Z to blame but themselves. Thankfully for them, they've got plenty of defenders.

Lending to a risky borrower, where credit history has narrowed their options, is an expensive undertaking no matter who makes the loan. Credit unions or small local banks are going to have terms and safeguards similar to payday lenders to manage their risk. Consumers can provide their own risk management by budgeting for the loan repayment, regardless of whom they borrow from. In fact, budgeting will generally go a long way to keep your credit score and credit options healthy.

These friggin scum of the earth should be forced to shut and be called illegal they are nothing but pret on the middle class and poor Washington is a do nothing bunch of aholes thats lets these predators continue to operate

Nothing but greed stricken jews, who are to lazy to work, so they pilfer what ever they can from those who can least afford it, nothing but greed stricken jews (a wart on societies ass).They should be shut down and thier owners deported to Israel.

The other side of the issue (which, obviously, no one wants to acknowledge), is that the companies that cater to this particular market have ridiculously high costs, risks and other consideration by virtue if the kind of borrowers they're dealing with.

Of course the costs to the borrowers are high. Their patrons are extremely high risk, and have demonstrated a likelihood of not paying back what they borrow. It's the reason they're resorting to this in the first place.

There are consequences to bad behavior. Most people learn this by the age of 2.

Give me a break.... "a female in a man's world". That is your perception. not the reality. If you were smart, you would use being a woman to your advantage, many do...and i do not mean ""gutter acts" either

For a number of months I went by one of those buy and pay here places. I noticed a nice looking car that I wanted. So I stopped and asked the price. Did not seem to be a bad price so I had a good down payment and offered to finance it at my credit union. They refused the deal. Why because there rates on loans was over 30%. Also they did not expect a down payment. So they refused to sale me the car. These places are pure and simple rip offs.

Not all I'm sure. I've never had "the pleasure" of dealing with a place like that, but I'd be willing to bet the vast majority would have taken the deal. I have a hard time believing, for instance, that if a guy walked up to them with cash in hand, they wouldn't take it. What is financing through your credit union to them but a cash deal anyway? The more I think of it, that story's kinda hard to believe.

Also, much of their customer base are parasites, hence the need to enter into these kinds of arrangements.

Everyone wants to jump on the side if the "hard working poor sap," who, by no fault of his own, "fell on hard times," but I'd bet the research would show that's a specifically small part of the customer base.

No, I'd bet the majority are the same type of people I see every day who have huge egos, buy way more (usually on credit) than they can afford, and have no compunction with mortgaging their and their children's futures to have the "latest and greatest."

When the inevitable downturn comes -- for which, by definition they will not be prepared -- they have everybody else from A to Z to blame but themselves. Thankfully for them, they've got plenty of defenders.